Shocking job losses sink futures

Intel, President Bush, Blix report also weigh

NEW YORK (CBS.MW) -- Stock futures were already down, but dove even deeper after the U.S. Labor Department shocked pre-open investors Friday with its February jobs report.

The selling had gotten an early start from disappointment over Intel's sales outlook and saber rattling by President Bush.

March S&P futures lost 10.40 to 811.40, which was about 10 3/4 points below fair value, according to figures provided by HL Camp & Company. Nasdaq 100 futures were down 15.50, or about 15 3/4 points below fair value, at 969.00.

The U.S. dollar also suffered, and hit a fresh four-year low versus the euro.

Activity picked up steam after the Labor Dept. said non-farm payrolls plunged by 308,000. The unemployment rate rose to 5.8 percent from 5.7 percent in January.

Economists had expected a small payrolls gain and a rise in the unemployment rate to 5.9 percent. A severe snowstorm in the eastern United States is probably behind some of the layoffs, economists suggested heading into this report. The size of the payrolls loss will likely be scrutinized for seasonal anomalies even though statistical adjustments are attempted to account for unusual events. The impact of military reservists leaving their jobs for duty may also have impacted this report, officials said.

Chip sector bellwether Intel
INTC, -0.66%
traded 80 cents, or 4.8 percent lower, to $15.90 in pre-open trading after the company indicated that first quarter sales would not reach the high-end of its forecasts, due to weaker-than-expected demand for its flash memory products. See full story.

The company also said gross margins could fall below its target of 50 percent, which could put earnings expectations at risk.

Analyst Dan Niles at Lehman Bros. followed by cutting his earnings and revenue estimates for 2003 and 2004.

Among others in the chip sector, Applied Materials
AMAT, -1.58%
was slumped 30 cents to $11.75, Novellus
NVLS
dropped 81 cents to $26.20 and KLA-Tencor
KLAC, -3.85%
gave up 92 cents to $33.

President Bush said in a prime time press conference that he would drive Iraq's Saddam Hussein from power if it comes to war, with or without support from other U.N. Security Council members (read more).

Also, chief U.N. weapons inspector Hans Blix is slated to speak to speak to the Security Council later Friday.

Fears of war, coupled with continued fears of a nuclear build up in North Korea, helped trigger a sell-off in the Japanese stock market to a 20-year low. See Asia Markets. European bourses couldn't escape the geo-political tensions, and also traded weaker (read more).

Aether Systems
AETH
fought off the negative sentiment to trade up a dime to $3.30. Analyst Paul Coster at J.P. Morgan believes the software company "is progressing well with operating expense reductions."

TiVo
TIVO, -1.99%
erased earlier gains to slip 9 cents to $6.20. The stock had rallied in Thursday's after hours session, and prior to the jobs data, after the maker of software for personal video recorders said late Thursday that it lost 25 cents a share in its fiscal fourth quarter, versus a loss of 92 cents in the year-earlier period, and narrower than the average analyst estimate compiled by Thomson First Call of 32 cents. The company added that it expected to breakeven or be cash-flow positive in fiscal 2004.

Elsewhere, UTStarcom
UTSI, -2.03%
slumped $1.70to $16.60 after the maker of telecommunications equipment said late Thursday that it planned to offer $350 million worth of convertible subordinated notes to qualified institutional buyers.

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